Press Release|Public Finance

KBRA Assigns A Rating to NJTTFA Transportation Program Bonds, 2023 Series BB; Affirms A+ Rating for New Jersey GO; Outlook is Stable

6 Nov 2023   |   New York


KBRA assigns a long-term rating of A with a Stable Outlook to the New Jersey Transportation Trust Fund Authority (NJTTFA) Transportation Program Bonds, 2023 Series BB.

KBRA additionally affirms the long-term rating of A+ with a Stable Outlook for the State of New Jersey's General Obligation Bonds.

Lastly, KBRA affirms the long-term rating of A with a Stable Outlook for the following bonds:

New Jersey Transportation Trust Fund Authority

  • Transportation Program Bonds
  • Transportation Program Notes (Fixed Rate)

New Jersey Economic Development Authority (NJEDA)

  • Lease Revenue Bonds

New Jersey Education Facilities Authority (NJEFA)

  • Revenue Bonds, Higher Education Capital Improvement Fund Issues

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

  • State economic base is large and diverse. Per capita personal income is the fourth highest in the nation.
  • Governor has broad executive powers under the New Jersey Constitution to adjust the budget and reduce spending to maintain budget balance.

Credit Challenges

  • The ability to achieve balanced operations and satisfactory reserves will be challenged by the loss of one-time federal revenues available to bolster finances through the pandemic.
  • Unfunded pension and OPEB liabilities are very high relative to personal income and gross state product.
  • Expiration of a 2.5% surcharge on corporate business tax at the end of CY 2023 is expected to reduce revenues by $333 million in FY 2024 and nearly a billion each year thereafter when fully phased out and could challenge structural budgetary balance.

Rating Sensitivities

For Upgrade

  • Track record of consistently balanced operations that do not rely upon non-recurring revenues, provide full actuarially determined pension contributions, and support maintenance of substantial operating reserves.
  • Economic growth patterns that meet or exceed regional and national trends.

For Downgrade

  • A resumption of the pattern of underfunding full actuarial pension contributions.
  • A significant diminution of reserves to balance financial operations to a level no longer consistent with the rating level.
  • Deteriorating economic conditions.

To access rating and relevant documents, click here.


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